'Limited scope for SEZs'

Montek proposes specialised industrial clusters

The Planning Commission today questioned the commerce and industry ministry's focus on special economic zones (SEZs) saying that there is scope for only five or six such designated areas.

It instead proposed specialised industrial clusters with flexible labour laws.

"We need specialised industrial clusters. They have their advantages. But the primary push has to come from states and the Centre can support them," Montek Singh Ahluwalia, deputy chairman, Planning Commission, said at the Federation of Indian Chambers of Commerce and Industry (Ficci) annual general meeting.

He said a case could also be made for providing SEZ status to certain categories of producers.

He also opposed the commerce and industry ministry's proposal to allow SEZ units to supply to domestic-tariff areas on payment of concessional duty as it would result in pockets of development and hinder the spread of industry.

Ahluwalia said a country could either avoid signing bilateral trade agreements or the government needed to reduce tariffs to curb arbitrage opportunities arising out of a lower duty regime under the free trade agreements (FTAs) and the high tariffs in India.

"India has one of the highest general duty rates in the world and if we enter into FTAs and don't decrease the general rate, we will create arbitrage opportunities for people to use the FTA to avoid paying duties," he said at a special interactive session with industry organised by Ficci today.

On the demands raised by various industries on indirect taxes, Ahluwalia said the finance ministry had a policy of rationalising the tax rates and industry could only make a case for moving from one tax bracket to another. Case-by-case exemptions were being done away with as a matter of policy.

The pharmaceutical industry need not worry unduly on an expansion in the scope of price control. Monitoring of essential drug prices was essential, but no irrational expansion in the scope of price control was likely to be introduced as a policy, he said.

Ahluwalia also said that the paper industry should go in for consultations with non-governmental organisations (NGOs).